Reference no: EM132952868
On August 15, 2019, Carla Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $792. The notional value of the call option is 880 shares, and the option price is $88. The option expires on January 31, 2020. The following data are available with respect to the call option.
Date Market Price of Counting Time Value of Call Option
Crows Shares
September 30, 2019 $106 per share $396
December 31, 2019 $101 per share 143
January 15, 2020 $103 per share 66
Problem 1: Prepare the journal entries for Carla for the following dates.
(a) Investment in call option on Counting Crows shares on August 15, 2019.
(b) September 30, 2019-Carla prepares financial statements.
(c) December 31, 2019-Carla prepares financial statements.
(d) January 15, 2020-Carla settles the call option on the Counting Crows shares.